Once you have out a list of expenses, it can help for you to break it into categories so you can see exactly here the money is going at the time. When you take the time to categorize the budget, you will feel that it is less likely you can feel overwhelmed by all of the numbers that come up.
The three most common categories of expenses to use will include:
- Fixed costs: These are the options that you know you will need to pay for each month. This would be your rent and utilities, any insurance that shows up, and the subscriptions you need to run your business.
- Variable expenses: These will be the expenses that could change from one month to another. They could be items like the cost to ship things to the customer. There can also be some seasonal expenses that you need to consider, such as having to pay for more inventory to keep up with the holidays.
- One-time purchases: One-off expenses will pop up now and then for your company. Maybe you need to get training for your employees or have a piece of equipment to update. You need to look ahead when you plan out your budget to make sure you are prepared for these expenses.